Definition of Flexi Cap Fund
A Flexi Cap Fund is an open-ended equity mutual fund that has the freedom to invest across companies of any market capitalization — large-cap, mid-cap, and small-cap — without any restriction on allocation percentages. The fund manager can dynamically shift the portfolio mix based on market conditions and opportunities.
SEBI introduced the Flexi Cap category in November 2020 to provide genuine flexibility (unlike Multi Cap funds which have fixed minimum allocations). Flexi Cap funds typically maintain a large-cap bias (60–70%) during market uncertainty and increase mid/small-cap exposure during bull markets.
Flexi Cap funds are considered one of the most investor-friendly equity categories because they allow a skilled fund manager to navigate across the market cap spectrum. They are suitable as a core equity holding for investors with a 5+ year horizon. However, performance varies significantly based on the fund manager's ability to make the right allocation calls.